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Manufacturer plans to double production by end 2013

Industrial fasteners producer Tel-Screw Products MD Ronald Teleng tells Engineering News that the company plans to double its production by the end of next year, despite the chal- lenges facing the industry.

The company is currently producing 450 t/m of product.

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The company is focused on the manufacture of specialised fasteners and has acquired equipment from a fellow fastener manufacturer, which closed down late last year.

“About 80% of the other company’s machinery was sent overseas, but we bought most of what was left in South Africa to service the local market,” says Teleng.

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He adds that Tel-Screw has also ordered modern, specialised machinery from Europe and is awaiting delivery.

This and the machinery acquired from the company that closed down will assist Tel-Screw in increasing its output of specialised and standard fasteners.

“Our specialised fasteners are our strong point. They enable us to supply a unique market and also reflect the importance we place on good customer service and product quality.

“When clients come in and explain their requirements to us, we are able to design and manufacture a specialised fastener to suit their needs,” says Tel-Screw GM Charmaine de Bruyn.

The company’s specialised fasteners are used in almost every industry, including the automotive, construction and electrification industries.

Teleng is excited about growth opportunities in the automotive industry, noting that the new machinery will enable Tel-Screw to gain a greater market share in that sector.

“The new equipment enables us to manufacture some products locally that are currently being outsourced by automotive manu- facturers. Automotive contracts are often long-term contracts.

“We may face a challenge, as the material used to manufacture automotive components is often heat resistant, and not readily available in South Africa. However, as with all the chal- lenges we face, we are confident that we can work around it and continue to be successful in reaching our goal of doubling our output,” he says.

Further, he states that few companies have access to the specialised machinery the company has acquired, adding that most of them are also unwilling to produce specialised fasteners, owing to the amount of time and effort this requires.

“We are also one of a few specialised fasteners manufacturers that are International Organisation of Standardisation certified,” he comments.

As part of its expansion plans, the company recently built a new factory at its Boksburg premises.

“The new factory gives us extra floor space for the new machinery,” says Teleng.

Besides the new machinery, the company also recently employed more staff to assist with increased output.

“Young, qualified people are hard to come by in the industry. With the other manufacturer closing down, we were able to employ eight new staff members, who started with us in January.

“So far, it has been successful. We have already, during the past few months, doubled production in this section,” he says.

De Bruyn adds that the company is training new staff in all aspects of fastener manufacturing and not simply preparing them to do only one job.

“There is a generation gap in the industry, mainly because we find that older people are reluctant to pass on their knowledge.

“Our aim with the younger employees is to close this gap. By training them fully, we create an opportunity for skills transfer, as they would then be able to train any one of our new apprentices,” she says.

Industry challengesIn addition to skills shortages, cheap imports, labour issues and a lack of government support also pose significant challenges for the company and industry at large, states Teleng.

“We recently conducted a survey on the quality of imported fasteners. Of the 14 samples we tested, only one managed to pass our quality test,” he says, adding that these products were all imported by South African companies.

De Bruyn adds that the import problem is exacerbated by the fact that the quality of these products is not monitored or tested.

“We try as much as possible to make our clients aware of the inferior quality of imported products, so they do not fall into that trap. If they do, it was not an uniformed choice,” she says.

Provisional antidumping duties of 104.5% were imple- mented last month to curb the import of fully threaded set screws with hexagonal heads, excluding stainless steel set screws from China, to protect the industry in the interim while an investigation by the International Trade Adminis-tration Commission of South Africa (Itac) into the matter is finalised.

The investigation began as a result of an application brought by the South African Fasteners Manufacturers Association (Safma), which submitted prima facie evidence of dumping to Itac in July last year.

It is expected that the investigation will be finalised by November 2, when the provi- sional duties will be lifted.

“The antidumping duties help; however, they only cover a portion of the products we produce. The imports are still killing us on pricing,” says De Bruyn.

She adds that not everyone in the industry is willing to stand together to combat the issue.

“Some manufacturers are actually just importing the cheap products and selling them at the price of locally manufactured products. They are actually helping to debilitate the industry,” she asserts.

The lack of government support for the local manufacturing industry further exacerbates the import challenge, the company adds.

“The biggest stumbling block is the lack of government support for the local manufacturing industry. It has left a gap in the market. Government allows imported products into the country for next to nothing, but is always talking about increasing job creation in the country.

“How are we supposed to employ more people and create jobs when they are importing products that can be manufactured locally? “Unless you are willing to spend a lot of time and money to fight it, as Safma has done with the antidumping duties, you simply cannot compete with the low prices of imported products,” she says.

Teleng adds that while import prices are down, prices of commodities like petrol and electricity are increasing out of proportion.

“Where must this money come from? If we had an open market where we could charge what- ever we like, then perhaps it would make sense, but that is not the case,” he states.

He notes that the company has managed to stay afloat as a result of its ability to manufacture specialised fasteners. This was especially important during the 2009 recession.

“Exporters from the East are not interested in sending 500 or 1 000 specialised fasteners. They want to send containers full of product here. “So we have managed to stay strong in that regard,’’ he says.

He adds that many imported products were used during the 2009 construction boom, but are now starting to fail owing to their inferior quality – sometimes with disastrous consequences.

“These failures are serious and have, in some cases, led to fatalities owing to structures collapsing,” he says, reminding end-users that there is a direct correlation between the price and quality of a product.

“Fasteners are usually the cheapest part of any application, yet people still continue to take shortcuts around this. “It makes no sense to save a few cents on a fastener, because when it fails, the whole structure is likely to fall apart,” he states.

Meanwhile, the company is also facing labour cost challenges.

“I have investigated other industries and found that we are paying our staff almost double what employees in other industries are being paid.

“The fasteners industry is a small industry and we are already competing with import prices. How do we now compete in the market when we have to pay our staff more than other industries do?” De Bruyn asks.

Optimistic Despite many challenges, the company remains optimistic about the future.

“There is potential for us to expand into other parts of Africa – for example, in Ghana, where big construction projects like mines could generate big orders for us,” says De Bruyn.

Teleng adds that the company is also hopeful that the antidumping duties will have a positive impact on the local sector.